16c ‎(2)‎

• Board Meeting Date: 7/22/2008
• Description: CF Section - New Project Loans - San Luis Valley Water Conservancy District - Water Rights Acquisition
• Board Meetings - Doc Type: Memo

San Luis Valley Water Conservancy District Agenda Item 16c
July 15, 2008
Page 5 of 6
Creditworthiness : The District has no existing debt. Its income currently comes from tax
assessments, annual fees, and water sales. CWCB Fi nancial Policy #8 states that costs of water
rights acquisitions are eligible fo r CWCB loans as long as the purch ase satisfies an existing water
need (not strictly for growth). For this reason, th e District’s new water sa les were not included as
income for the financial analysis . Repayment ratios were calculat ed using only tax assessments and
annual fees as income.
The District presently has over $900,000 in cash re serves. From that, $80,000 will be paid as its
10% match (earnest money) on this acquisition. U pon the execution of the sa le of this one-third
interest of the Ditch, the District intends to try to acquire the remaining one-sixth (3cfs) of the
Ditch. If the District’s offer is accepted, it will pu rchase the remaining interest with cash from its
reserves. This was also considered when an alyzing the District’s future finances.
The District increased its fees in 2002 in an effort to rebuild its reserve account (which was being
drawn down by ongoing operations of the augmentati on program). Based on its current income and
expenditures, rates currently do not need to be raised to cover the CWCB debt service.
Table 2 shows the Financial Ratio s for the District’s revenues.
Table 2. Financial Ratios
Future
Past 3 Years
Financial Ratio
w/ Project
118% 118%
Operating Ratio (revenues/expenses)
(Average) (Average)
weak: <100% - average: 100% - 120% - strong: >120%
$323/273K $323/273K
115%
Debt Service Coverage Ratio
(Average)
(revenues-expenses)/debt service
(N/A)
($323-273K)/
weak: <100% - average: 100% - 120% - strong: >120%
$44K
307% 133%
Cash Reserves to Current Expenses
(Strong) (Strong)
weak: <50% - average: 50% - 100% - strong: >100%
$839/273K $420/317K
Annual Operating Cost per Acre-Foot
*
$748** $626***
$273K/365 $420K/506
weak: >$20 - average: $10 - $20 - strong: <$10
*Cost per acre-foot is based on fully consumable water in the augmentation plan. This ratio is usually used
for agricultural financial analysis and may apply here.
**Past years based on 365 AF – estimated yield from augmentation decrees
***With project based on 365 AF + 141 AF (estimated yields) = 506 AF
Collateral - Security for this loan will be a pledge of Wate r Activity Enterprise revenues backed by
a rate covenant and annual fina ncial reporting. This security is in compliance with CWCB Loan
Policy #5 (Collateral).